Cheema Company maintains a petty cash fund for small expenditures. The following transactions occurred over a two-month
Question:
Cheema Company maintains a petty cash fund for small expenditures. The following transactions occurred over a two-month period:
July 1 Established petty cash fund by writing a cheque on Haida Bank for $200.
July 15 Replenished the petty cash fund by writing a cheque for $194.30. On this date the fund consisted of $5.70 in cash and the following petty cash receipts:
Freight out..........................$94.00
Postage expense.....................42.40
Entertainment expense.............45.90
Supplies..............................10.70
Aug.16 Aug.31
July 31 Replenished the petty cash fund by writing a cheque for $192.00. At this date, the fund consisted of $8.00 in cash and the following petty cash receipts:
Freight out...........................$82.10
Contributions expense................30.00
Postage expense......................47.80
Repairs expense......................32.10
Aug 15 Replenished the petty cash fund by writing a cheque for $188.00. On this date, the fund consisted of $12.00 in cash and the following petty cash receipts:
Freight out............................$77.60
Entertainment expense...............30.00
Postage expense.......................47.80
Supplies.................................32.10
Aug 16 Increased the amount of the petty cash fund to $300 by writing a cheque for $100.
Aug 31 Replenished the petty cash fund by writing a cheque for $283.00. On this date, the fund consisted of $17.00 in cash and the following petty cash receipts:
Postage expense.................$145.00
Travel expense.....................90.60
Freight out..........................46.00
Instructions
Replenished the petty cash fund by writing a cheque for $188.00. On this date, the fund consisted of $12.00 in cash and the following petty cash receipts:
(a) Journalize the petty cash transactions.
(b) What internal control features exist in a petty cash fund?
Taking It Further
Frank Cheema believes that because a petty cash fund is established, there will no longer be a need to record any journal entries for the expenses paid using the fund. Is Frank correct? Why or why not?
Step by Step Answer:
Accounting Principles
ISBN: 978-1119048503
7th Canadian Edition Volume 1
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak